THE US Federal Trade Commission is preparing to settle with the company behind the popular video game Genshin Impact over concerns that the money-making mechanics of the game were deceptive, according to people with knowledge of the matter.
Some players who paid for the chance to win digital items in the game could be reimbursed as part of the deal, said the people, who asked not to be identified discussing a confidential matter. Details of the agreement, which could be announced as soon as this week, weren’t immediately available.
FTC consumer protection officials have been investigating Genshin Impact and its publisher, Singapore-based Hoyoverse, since at least last summer, according to another person. The case will be among the final acts of the agency under its current chair, Lina Khan, a Biden appointee. Genshin Impact, played by millions, was developed by Chinese developer Mihoyo, which is part of Hoyoverse.
The FTC investigation has centered in part on whether the process for obtaining rarer “five-star” characters is misleading because the value of the virtual currencies in the game is difficult to discern, said the people.
An FTC spokesperson declined to comment. A spokesperson for Cognosphere, the distributor of Genshin Impact, declined to comment.
The agency has been broadly looking into video games’ use of so-called loot boxes since 2019, when it held a workshop on the issue. Players use real money to purchase the chance to obtain digital items.
Released in 2020, Genshin Impact is a role-playing game involving collectible characters with unique fighting skills. It was one of the first Chinese video games to go viral in the US.
In Genshin Impact, players purchase chances to win particular characters and items. The game has brought in more than $6 billion in revenue on mobile devices, according to data from AppMagic, and is also available on PCs, Microsoft Corp.’s Xbox and Sony Group Corp.’s PlayStation consoles.
The monetization strategy has stirred controversy among some gamers. The chance-based system, called “gacha,” is often compared to gambling. While it is common in China, Japan and South Korea, Genshin Impact was one of the first popular “gacha” games outside Asia.
Still, money-making strategies involving gamers paying for the chance to earn digital goods are widespread and employed in Electronic Arts Inc.’s soccer titles and Valve Corp.’s Counter-Strike 2.
Critics have said Genshin Impact’s chance-based mechanics are more complicated than traditional loot boxes. For example, Genshin Impact players can spend real money on a virtual currency, exchange that for another currency, and another, and then “wish” for characters they want. More powerful characters are often more rare.
Users can also obtain these characters for free by playing frequently, earning the virtual currency and then “wishing.”
Various other governments, including officials in the UK and China, have probed the use of chance-based mechanics in video games. Chinese regulators have long required game makers to disclose the odds of earning certain items, for example. The UK formed a committee to research potential harms associated with loot boxes. –BLOOMBERG